How 2024 Real Estate Changes Affect VA Home Loan Borrowers

The real estate industry got a major shake-up in August 2024. A $418 million settlement with the National Association of Realtors (NAR) changed how real estate agents get paid. For veterans using VA home loans, these changes are a big deal. They affect how you shop for homes and work with real estate agents.

As a loan officer who works with VA loans every day, I’ve been keeping a close eye on these 2024 real estate changes. I want to help you understand what’s new and how it affects your home-buying journey.

2024 Real Estate Changes: What’s New for Veterans?

The August 2024 settlement with NAR has turned the real estate world upside down, especially when it comes to how buyer’s agents get paid. This is a complete overhaul that affects everyone involved in buying a home, including veterans using VA loans.

A Quick Look at the August 2024 Settlement

On August 17, 2024, the NAR agreed to pay $418 million to settle a class action lawsuit. But money isn’t the big news here. The real issue is that listing agents can’t put buyer agent commissions on the Multiple Listing Service (MLS) anymore.

Before this, when you looked at a home listing, you’d see something like “3% commission to buyer’s agent.” That’s gone now. It might not sound like a big deal, but it changes everything about how agents get paid and how you’ll work with them.

How It Affects Veterans Using VA Home Loans

For veterans using VA loans, this change is huge. In the past, you didn’t have to worry about paying your real estate agent directly. The seller usually covered that cost. But now, things are different.

As of August 10, 2024, the Department of Veterans Affairs (VA) made a quick change to their rules. They now allow veterans to pay certain real estate buyer-broker fees when buying a home. This might sound like bad news at first, but it’s actually meant to keep you competitive in the market.

Here’s why: With the new rules, all buyers – not just veterans – need to negotiate their agent’s pay directly. If veterans couldn’t do this, they might be at a disadvantage when making offers on homes.

Breaking Down the New Rules

The real estate game has new rules, and all VA loan users MUST understand them. These changes affect how you’ll interact with real estate agents and approach home buying.

No More Automatic Commissions on MLS Listings

Under the new rules, sellers can still offer to pay buyer’s agents, but they can’t advertise it on the MLS. This means you’ll need to be more involved in how your agent gets paid.

Let’s say you’re looking at a $300,000 home. In the past, the listing might have said the seller would pay a 3% commission ($9,000) to the buyer’s agent.

Now, that information isn’t there. You might need to negotiate a 2.5% fee ($7,500) with your agent, or maybe even a flat fee of $5,000. It’s all up for discussion now.

Written Agreements Now Required: What to Expect

Here’s another big change: You now need to sign a written agreement with your real estate agent before you start looking at homes. This isn’t just a handshake deal anymore.

The agreement needs to spell out exactly how much you’ll pay your agent (or if you’re asking the seller to pay them), what specific services they’ll provide, and a statement that you can negotiate this fee.

For example, your agreement might say you’ll pay a 2.5% fee on any home you buy, but only if the agent shows you at least 10 homes and helps with all the paperwork. Or it might be a flat $5,000 fee for a full service package. The key is that it’s all spelled out upfront.

How These Changes Impact Veterans Specifically

The VA made a quick change to keep up with all this. Now, you can pay your buyer’s agent directly if you need to. This is new – before, VA rules didn’t allow this. But you still have options. You can negotiate with the seller to cover these costs, just like before.

For instance, on that $300,000 home we talked about earlier, you could ask the seller to pay the $7,500 agent fee as part of your offer negotiations. The VA is keeping an eye on how all this plays out to see if they need to make any permanent changes to their rules.

What These Changes Mean for Your Home-Buying Journey

These changes have reshaped the home-buying process for VA loan users. You’ll need to think about new costs, but you’ll also have more room to negotiate.

New Costs to Consider

With these changes, you might face some new costs when buying a home. Let’s break it down with a real-world example:

These are potential costs. You can still negotiate to have the seller cover some or all of the buyer’s agent fee. And if you’ve used your VA loan before, that funding fee might be higher – 3.3% if you’re not putting any money down.

More Room for Negotiation

These changes give you more wiggle room in negotiations. You can negotiate your agent’s fee directly – maybe you can get a better deal than the standard 3%. You can also still ask the seller to pay your agent’s fee as part of your offer.

Here’s a neat trick: If the seller agrees to pay more than what you’ve negotiated with your agent, you might be able to use that extra money for other closing costs.

For instance, if you negotiated 2.5% ($7,500) with your agent but the seller agrees to 3% ($9,000), that extra $1,500 could go towards your other closing costs.

How to Make the Most of Your VA Loan Today

Despite these changes, VA loans are still a fantastic option for eligible veterans. You still get VA loan guaranteed benefits like no down payment requirement, no private mortgage insurance, and competitive interest rates. The key is knowing how to use these benefits in the new landscape.

Tips for Negotiating Broker Fees

When you’re talking about fees with your agent, don’t be afraid to ask questions. Some agents might offer a flat fee instead of a percentage. For example, instead of 3% on a $300,000 home ($9,000), an agent might agree to a flat $7,000 fee.

Ask what services are included too. Are they just going to show you homes, or will they help with negotiations, paperwork, and recommending other professionals like home inspectors? Make sure you’re getting your money’s worth.

And as always, it’s okay to shop around. Talk to a few agents before you decide. You might find one who’s willing to work with your budget or offers services that really fit your needs.

Leverage VA Loan Perks in Negotiations

Your VA loan gives you some great bargaining chips. The no down payment requirement means you might have more cash for other costs. VA-backed loans are seen as reliable by sellers, which can be a strong point in your favor.

When you’re making an offer, don’t be shy about mentioning these benefits. A seller might be more willing to cover your agent’s fee if they understand that a VA loan means a solid, government-backed deal.

You could say something like, “I’m offering full asking price with a VA loan, which means a guaranteed, quick closing. In exchange, I’d like you to cover the 2.5% buyer’s agent fee.”

How Different States Are Handling the Changes

These changes are happening all over the country, but how they play out can vary depending on where you live. Let’s look at a few examples:

In Texas, which has a large veteran population, the Real Estate Commission quickly updated their rules and created new forms for buyer representation agreements. They’re focusing on educating both agents and buyers about the new process.

California is taking a different approach. They’re emphasizing extensive training for real estate agents, making sure they know how to clearly explain fees to clients. Some local real estate boards are even creating standardized buyer-broker agreements to help with the transition.

Florida is seeing an interesting trend. There’s been an increase in flat-fee and discount brokerages popping up. These might offer lower costs for Veterans, but make sure you understand exactly what services you’re getting for the price.

No matter where you live, keep an eye out for new forms and changing practices. You might see more emphasis on seller concessions or other incentives to attract buyers. Don’t be afraid to ask your agent how things work in your specific area.

So What’s Next for VA Home Loans?

The VA is keeping a close eye on how these changes affect veterans. They might make some more adjustments to keep VA home loans competitive.

For example, the temporary rule allowing veterans to pay buyer-broker fees might become permanent. They might also change their policies on seller concessions to give Veterans more flexibility.

Right now, sellers can contribute up to 4% of the home’s value towards your closing costs. That limit might change.

We might also see new educational requirements for your trusted VA loan officer, lenders, and real estate agents who work with VA loans. The goal would be to make sure everyone understands these new rules and can explain them clearly to veterans.

In the broader market, we’re likely to see more transparent pricing. Agents might start offering more a-la-carte services, where you pay for specific things you need rather than a full-service package.

Help is Out There: Resources for VA Loan Users

The VA has updated its home loan website with detailed information about the new rules. They’re offering webinars and online courses too. These cover topics like how to negotiate with agents and understand the new forms you’ll need to sign.

VA loan counselors are now trained to help with questions about agent fees and negotiations. They can give you personalized advice based on your situation.

Don’t forget about Veterans Service Organizations. Many offer free counseling on home buying. They can help you understand how these changes might affect your specific situation.

As a VA-approved lender, I’m here to help too. We’re trained on these new rules and can guide you through the process. Don’t hesitate to give me a call with questions or concerns regarding these 2024 real estate changes.

Sure, these changes might seem complicated, but they’re designed to give you more control and transparency in the home-buying process. With the right information and preparation, you can still use your VA loan benefit to achieve your dream of homeownership.

Real Estate changes in 2024 FAQS